The uncertainties around PepsiCo Inc's (NASDAQ:PEP) performance in 2025 are already priced into the stock, according to Piper Sandler.
The PepsiCo Analyst: Analyst Michael Lavery initiated coverage of PepsiCo with an Overweight rating and a price target of $171.
The PepsiCo Thesis: In the back half of 2024, the company started promotional discounting for Frito-Lay North America, which has been the driver its EBIT growth over the last few years, and the lower prices could run through at least the first half of 2025, Lavery said in the initiation note.
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With U.S. consumer spending remaining under pressure, PepsiCo promoted more aggressively to maintain household penetration, the analyst stated. He added, however, that the company some of the company's new promotions and price points "proved unprofitable."
"We expect it to focus more carefully on self-funded promotions in 2025, with much more modest margin headwinds in FLNA," Lavery further wrote.
"While the business is challenged, the promotional environment remains uncertain, and investor sentiment on PEP is negative, we believe this may present a buying opportunity for investors with a long-term time horizon," he further stated.
PEP Price Action: Shares of PepsiCo are down 0.19% to $146 at the time of publication on Tuesday.
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